Dutch report urges strong Britain-EU trade ties after Brexit

AMSTERDAM (Reuters) - The Netherlands should push for the European Union to keep strong trade ties with Britain after the British quit the EU, a report commissioned by the Dutch parliament said on Tuesday.

Britain is the Netherlands' second-largest trading partner, accounting for 9 percent of exports, according to the paper by two members of the Dutch parliament.

"Any restriction on free trade with Britain would inevitably be at the cost of Dutch exports, prosperity and employment," it said.

"The rapporteurs plead for keeping the tight and free trade relationship between Britain and the 27 EU members by means of a secure relationship to the European internal market," it added.

At the same time, said Pieter Omtzigt, one of the rapporteurs, a top priority should be protecting the rights of EU citizens already in Britain -- 73,000 of them are Dutch -- to remain.

"Of course that would go for the Brits who are now in living in the Netherlands," Omtzigt said, adding that it would make sense to do this even before the trade negotiations begin. "They should not be used as bargaining chips."

British Prime Minister Theresa May said this week she would start the process of leaving the EU on March 29, beginning two years of negotiations before Britain's final departure.

She is facing competing calls to keep trade, financial and political relations with EU member states as close as possible, while satisfying euroskeptics in her party who demand a complete break from an institution they say has stolen British sovereignty.

The Dutch report said Britain and the Netherlands' fellow EU states could explore a number of options, including reverting to earlier European trade agreements or crafting a new, tailor-made agreement for Britain.

"There's no reason at all to allow Britain to cherry pick ... but there's also no reason to prevent Britain from receiving trade advantages," given to other neighboring countries, it said.

"Why would we offer nice deals for Ukraine and Turkey and not to Britain? I'm willing to fight for that," Omtzigt said.

For the Netherlands, allowing Britain to crash out of the EU with no agreement in place would be "very undesirable" because of trade tariffs that would "without doubt damage the Dutch economy," the report said.

An earlier study by the Netherlands Bureau for Economic Policy Analysis (CPB) found that Brexit would cost the Dutch economy 10 billion euros annually, or 1.2 percent of GDP, by 2030. That figure could be reduced by 20 percent, the CPB said if Britain reached some kind of agreement with the EU that cut trade tariffs in half.